Roofing contractors have faced challenges recently because of
volatile pricing and some material shortages. Although the problem
became more acute for roofing contractors midway through 2004,
other construction industry trades have been facing the problem for
more than a year.
Rising material prices now are a part of doing business and may
remain so for the foreseeable future given China's voracious
appetite for steel and other construction materials, production
shortages and rising transportation costs. Steel prices have been
particularly volatile. Prices for copper, aluminum, cement,
petroleum, natural gas, wood products and gypsum also have
increased dramatically, and spot shortages have been reported.
Although the problem may seem unprecedented to roofing
professionals, it is not new. Following the 1973 Organization of
Petroleum Exporting Countries (OPEC) oil embargo and political
instability in the Middle East during the 1970s and 1980s, gas and
oil prices dramatically increased. Unexpected material price
increases caused by diverse factors threatened numerous industries.
In response to these circumstances, companies that were bound to
fixed-price contracts when confronted by steep, unexpected
production costs sought legal relief by asking courts to relieve
them of their contractual obligations. Various legal theories have
been attempted. None have been particularly successful.
The general rule of law is the risk of material price increases
in fixed-price construction contracts are borne by the contractor.
The fact that performance has become economically burdensome or
unattractive is not sufficient legal grounds for performance to be
excused. In the absence of a specific contract provision, courts
rarely will rule a party is excused or entitled to a price increase
because of unexpected, substantial price increases with regard to
obtaining materials. If a material is unavailable, courts will be
more receptive to reforming a contract compared with when a
material can be obtained at a higher...
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